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Distributing the Returns to Natural CapitalOwnership of land and other natural capital is also quite concentratedthroughout the world. While the factor share of rent is generally calculatedto be only 2% of income, this calculation ignores two major sourcesof returns to natural capital. First, returns from the extraction of naturalresources are often classified as profit, when in reality most of the returnsare actually rent. (Recall that rent is the profit above and beyond what isneeded to supply the resource. The supply of nonrenewable resources isfixed, and the sales price of many renewable resources is often higher thanwould be needed to supply the market.) Second, many of the returns tonatural resources are in the form of hidden subsidies. For example, whenan industry pollutes water or air and is not required to pay for the coststhis imposes, the industry is capturing the returns to the waste absorptioncapacity of the environment.Ending Public Subsidies. When the state owns the resources in question,extractive industries are typically required to pay royalties on those resources.In many cases, these royalties are quite small. The state should beable to charge a royalty equal to the scarcity rent. 13 By spending the royaltyon public goods, using it to reduce taxes, or distributing it as a citizens’dividend, the state can use rents to improve distribution. In someprimary industries, government subsidies to natural resource extractingcorporations can be quite blatant. A number of examples from the UnitedStates illustrate this point.Under the Mining Law of 1872, corporations can purchase the surfaceand mineral rights to federal land for $2.50–$5.00 per acre, depending onthe nature of the mineral deposit. 14 This law was originally designed toprovide incentives for people of European descent to settle the AmericanWest, but now it is little more than a giveaway to large corporations, manyof which are not even from the U.S. Publicly owned rangeland is frequentlyleased to big ranchers at a fraction of the fair market value. 15Rights to timber in national forests are often sold for less than it costs thegovernment to build the access roads to the resource, or at times even forless than it costs to prepare the bids. 16 As a result, many publicly ownedChapter 23 Just Distribution • 45113 D. M. Roodman, The Natural Wealth of Nations: Harnessing the Market for the Environment,New York: Norton, 1998.14 M. Humphries and C. Vincent, CRS Issue Brief for Congress: IB89130: Mining on FederalLands, May 3, 2001. National Council for Science and the Environment. Online:http://www.cnie.org/nle/mine-1.html.15 B. Cody, Grazing Fees: An Overview. CRS Report for Congress, 1996. Online:http://cnie.org/NLE/CRSreports/Agriculture/ag-5.cfm.16 R. Gorte, Below-Cost Timber Sales: Overview. CRS Report for Congress, 1994. Online:http://www.cnie.org/nle/for-1.html.